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Supreme Court considers statutory meaning of ‘in default’: Hastings BC v Manolete Partners plc

The Supreme Court has ruled on the meaning of 'default' in section 106 of the Building Act 1984, which gives a right to compensation in relation to the exercise by authorities of statutory powers contained in the Act.

Accepting submissions made by Steven Gasztowicz QC, leading Jack Parker, the Court decided that the High Court and Court of Appeal had been wrong to decide that a breach of legal obligations, howsoever arising, was not sufficient for someone to be 'in default' and that only breaches of obligations arising under the Act itself would do.

It also expressly disagreed with a passage in the judgment of the Court of Appeal indicating that breach of other legal duties (arising under, for example, the Occupiers' Liability Act 1957 and the Health & Safety at Work Act 1974) were not matters that fell to be considered on the assessment of compensation under s106.

On the facts, the Court decided that as the exercise of the statutory power was not triggered by the alleged breaches of duty by the occupier of units on Hastings Pier (in whose shoes Manolete, the claimant, stood) it could in principle make a claim for compensation under s106, but made clear that the question of whether the losses claimed should be substantially reduced by reason of the state of the structure and its implications, having regard to the statutory and common law responsibilities of the occupier to its clients and employees, will be relevant at the assessment stage.